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Biotech / Medical : wla(warner lambert)
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To: SeachRE who wrote (641)3/26/1999 10:19:00 PM
From: Anthony Wong  Read Replies (2) of 942
 
SeachRE, Bloomberg says that Warner-Lambert had 1998 sales of Rezulin of $748 million, accounting for 7 percent of its $10.2 billion in total sales. According to a Merrill Lynch report of Jan. 21, that is "11% of WLA's total earnings per share, about $0.17 of ML's 1998 estimate of $1.48."

The same Merrill Lynch report also stated:

"For the sake of this exercise, we have outlined below what WLA's EPS would look like if Rezulin is totally removed from the P & L, assuming that Rezulin's EPS impact remained at 11% going forward. This is conservative as we expect Rezulin's relative contribution to shrink.

In the no-Rezulin scenario, the long term growth rate would still be 19%. Apply a 25% discount to the group average 1999 P/E-to-growth rate multiple of 2.5x would get us to roughly $61. Because the scenario represents the total absence of Rezulin, we view $61 as the "rock bottom price" or downward risk case."
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